Equipment Conductors & Cable Ltd vs Transmission Corporation Of Andhra ...

[Arising out of Order dated 16.07.2018 passed by National Company Law Tribunal, Hyderabad Bench, Hyderabad in Appeal No. C.P. (IB) No.167/9/HDB/2018]

IN THE MATTER OF: Before NCLT Before NCLAT

Equipment Conductors & Original Petitioner Appellant Cables Limited 21, Satkar Building, 79-80, Nehru Place, New Delhi - 110019

Now at: Equipment Conductors & Cables Limited A-30/9, DLF Phase - I, Qutab Enclave, Gurgaon - 122002 Through its Authorized Representative, Shri Alok Sharma, Managing Director

Versus

Transmission Corporation Original Respondent Respondent of Andhra Pradesh Limited Vidyut Soudha, Gunadala, Eluru Road, Vijaywada, Andhra Pradesh - 520004 Through its Chairman

For Appellant: Shri Arun Kathpalia, Senior Advocate with Shri Dheeraj Gupta and Ms. Sanam Siddiqui, Advocates

For Respondent: Shri Rakesh K. Sharma and Shri Nishant Sharma, Advocates 2

JUDGEMENT

(1st April, 2019)

A.I.S. Cheema, J. :

1. The Appellant - Operational Creditor filed C.P. (IB)

No.167/9/HDB/2018 under Section 9 of Insolvency and Bankruptcy

Code, 2016 (IBC - in short) against the Respondents - Corporate Debtor

which came to be rejected as the Adjudicating Authority (National

Company Law Tribunal, Hyderabad Bench, Hyderabad) on 16.07.2018

came to a conclusion that there was a pre-existing dispute with regard to

quantum of liability.

2. The Appellant claims and it has been argued for the Appellant that

the Respondent had placed orders with the Appellant for supply of

conductors/finished products on 25.05.1998 and the goods were supplied.

The entire amount of invoice has been paid with delay but without interest

as was required to be paid under Sections 3 to 5 of "Interest on Delayed

Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993"

(Interest Act - in short). According to the Appellant, it had filed claim with

Arbitral Tribunal (Haryana Micro and Small Enterprises Facilitation

Council) claiming Rs.40,25,648/- upto 30.06.2001 for bills mentioned at

Serial Nos.1 to 45. Subsequently, updated claim was filed to claim

Rs.1,36,00,184/- upto 31.01.2008 on account of interest. The Arbitral

Tribunal allowed the claim of the Appellant on 21.06.2010 with regard to

bills mentioned at Serial Nos.26 to 45 to actual date of payment with

Company Appeal (AT) (Insolvency) No.517 of 2018 3

monthly compounding as per the provisions of the Interest Act. The

Respondent filed Objection Petition on 19.10.2010 under Section 34 of the

Arbitration and Conciliation Act, 1996 (Arbitration Act - in short) read with

Section 19 of The Micro, Small and Medium Enterprises Development Act,

2006 (Act of 2006 - in short) to set aside the Award. The Objection Petition

AC 580 of 2010 was dismissed by ADJ, Chandigarh in August, 2014 and

Respondent filed Appeal FAO 68/2015 under Section 37 of the Arbitration

Act before Punjab and Haryana High Court on 29.01.2016 remanded the

matter back giving opportunity to the Respondent to raise objections under

Section 34. It is stated that the Appellant then approached Industry

Facilitation Council to secure the Arbitral Award amount but the same was

dismissed on 14.09.2017 by the Council holding that there was no

ambiguity in the Award and as regards interest, the same was recurring

aspect and could not be determined for a particular time and had to be

seen at the time of making final payment.

3. The Appellant claims that on 25th January, 2018, Appellant issued

Demand Notice under IBC for Rs.3,79,61,269/- as dues upto 31.05.2016

and future interest as per the Award dated 01.06.2016. The said Demand

Notice was cursorily and vaguely replied by the Respondent on 2nd

February, 2018 claiming that the Objection Application under Section 34

of the Arbitration Act was still pending and referred to Execution Petition

CEP 41/2017 Court Orders and claimed that the same was dismissed and

attachment Order seized to exist. Consequently, the Appellant filed

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Application under Section 9 of IBC on 19th February, 2018. On 17th April,

2018, the Court of ADJ, Chandigarh dismissed Objection Petition under

Section 34 and confirmed the Arbitral Award. The Respondent filed Appeal

to Hon'ble Supreme Court in SLP (C) 14954/2018 but the same was

dismissed by the Hon'ble Supreme Court on 06.06.2018. According to the

Appellant, in the circumstances, it was apparent that there was the debt

due and the Executing Authority erroneously dismissed the Company

Petition filed under Section 9 of the IBC.

4. Against this, Reply has been field by the Respondent and it is also

argued that before the Arbitration Council, the Appellant had filed its

claims for invoices 1 to 45 but the same were allowed only regarding

invoices 26 to 45 and invoices at Serial No.1 to 25 were held to be time

barred. It is claimed that the amounts towards interest for the delayed

payment of original invoice amount, which was liable to be paid in respect

of claims 26 to 45, was appended to the said Award at Rs.22,42,619/-.

Respondent claims that after the Arbitral Award was passed, the Appellant

went on filing several execution proceedings and the Respondent

challenged Award under Section 34 of the Arbitration Act. Respondent had

filed original Petition under the Arbitration Act OP 523 of 2010 before Chief

Judge, City Civil Court, Hyderabad under Section 34 of the Arbitration Act.

Respondent also deposited 75% of the Award amount as per Section 19 of

"Micro Small and Medium Enterprises Development Act, 2006". This Act

repealed the Interest Act with effect from 02.10.2006. The Respondent has

Company Appeal (AT) (Insolvency) No.517 of 2018 5

referred also to proceedings filed by the Appellant with regard to its rejected

claim regarding invoices at Serial Nos.1 to 25. In the present matter, we

are not concerned with litigation with regard to those invoices at Serial

Nos.1 to 25.

5. It is stated for the Respondent that the OP filed by the Respondent

was transferred to District Judge, Chandigarh and renumbered as

Arbitration Case No.580 of 2010. The District Court, Chandigarh

dismissed the Arbitration Case No.580 of 2010 in August, 2014 on the

ground that the Respondent had failed to deposit full amount towards 75%

of the Award. (This way required to be determined in view of Section 7 of

the Interest Act to entertain the Appeal.) Being aggrieved, Respondent filed

Appeals before the Hon'ble High Court of Punjab and Haryana which was

numbered as FAO 34 of 2015 and FAO 68 of 2015. Common Orders were

passed on 29.01.2016 along with other Appeals between the same parties

and the Order of District Court in OP 580 of 2010 was set aside and matter

was remanded to District Court for determining the actual amount towards

75% of the Award giving Respondent time to deposit the balance in 15

days. It was directed by the High Court that on deposit of the amount

towards 75%, the District Court shall decide the case on merits. The

Respondent claims that Respondent accordingly filed its calculation in

respect of 75% of the amount and after determining the same, it was

deposited in District Court, Chandigarh.

Company Appeal (AT) (Insolvency) No.517 of 2018 6

6. It is argued for Respondent that during pendency of the OP in

District Court, Chandigarh, Appellant filed Execution Petition before

2nd Additional District Court, Chandigarh and got the Execution Petition

transferred to the City Civil Court at Hyderabad which came up before 2nd

Additional Chief Judge, City Civil Court, Hyderabad and was registered as

EP 61/2011. The same was dismissed in limini on 19th February, 2016.

The Respondent states that the Appellant then filed another Execution

Petition EP 33/2016 before City Civil Court, Hyderabad to recover monies

as per the Award under dispute, but for recovery of amount beyond the

award together with other amounts in respect of claims 1 to 25 for which

no Award had been passed and in the process, sought prohibitory orders

which were granted on 30th June, 2016 because of which, Respondent

filed Civil Revision CRP 3601 of 2016 before the Hon'ble High Court of

Andhra Pradesh and the same was allowed on 8th November, 2016 holding

that the Execution Petition filed with regard to invoices 1 to 25 and the

Garnishee Order issued for recovery of the said amount was illegal. The

Garnishee Order was, however, confirmed with regard to invoices 26 to 45.

Respondent claims that being aggrieved, Respondent filed SLP 187 of 2017

before the Hon'ble Supreme Court of India but the same was disposed by

direction to the Additional District Judge, Chandigarh to determine the

amount towards 75% of the Award to enable Respondent to deposit the

same within 15 days from the date of Order. According to the Respondent,

subsequently, as per Orders of District Court, the Respondent deposited

the determined amount towards 75%.

Company Appeal (AT) (Insolvency) No.517 of 2018 7

7. The Respondent has submitted that subsequently Execution

Petition of the Appellant 33 of 2016 was transferred to Additional Chief

Judge, City Civil Court, Hyderabad and renumbered as CEP 41 of 2017

and the Executing Court considered the Orders of District Court,

Chandigarh which ascertained the amount towards 75% of the Award and

considering the fact that Respondent deposited 75% Award, was pleased

to dismiss the CEP by Order dated 20.11.2017.

8. The Respondent is pointing out that the Appellant again filed CEP

15/2018 relating to invoices 26 to 45 before the Commercial Court-cum-

XXIV Additional Chief Judge, City Civil Court, Hyderabad which was closed

by Orders dated 27.08.2018 by the Executing Court. According to the

Respondent, when such CEP was pending before City Civil Court,

Hyderabad, the present proceedings came to be filed which according to

the Respondent has been rightly dismissed by NCLT by Impugned Order.

The Respondent has also referred to the Appellant approaching Haryana

Facilitation Council and the Counsel holding on 06.09.2017 that the

application filed by the Appellant was not maintainable and has pointed

out further developments of the Appellant moving another Application for

review of that Order and arraying APDISCOMS together with State Bank

of India as garnishees and that the Council without Notice to the

Respondent for garnishee relying on the calculation made by the Appellant

re-determined the amounts. According to the Respondent, the Respondent

together with APDISCOMS have filed Writ Petition challenging Order dated

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11.07.2018 passed by the Haryana Facilitation Council and the Hon'ble

High Court of Andhra Pradesh by Interim Order dated 24.08.2018

suspended the Order dated 11.07.2018.

9. Respondent is further pointing out as per Orders dated

13.01.2017 of the Hon'ble Supreme Court in SLP 187 of 2017, District

Court, Chandigarh vide Order dated 06.01.2018 decided that the 75% of

the awarded amount comes to Rs.24,50,046/- which it is claimed is paid.

According to the Respondent, during execution proceedings, the Execution

Court got attached Rs.6,57,506/- from the Respondent's bank account.

District Court, Chandigarh dismissed the OP and confirmed the Award on

21.06.2010. However, according to the Respondent, he has paid in all

Rs.24,95,041/- which is full amount of the Award and no dues of any

money is payable under the said Award (Diary No.7688 - Page-11).

10. The learned Counsel for the Respondent pointed out that when the

Arbitration Case 580 of 2010 filed by the Respondent/A.P. TRANSCO

before ADJ was dismissed on 17.04.2018, Respondent had filed FAO 2764

of 2018 to the High Court but the same was dismissed on 18 th May, 2018

and the Respondent then filed SLP 14954/2018 before Hon'ble Supreme

Court, which also came to be dismissed on 6th June, 2018. The Counsel

submitted that after such dismissal, Respondent had filed MA 1638/2018

in SLP (C)14954/2018 seeking clarification and the Hon'ble Supreme

Court passed the following Order:-

Company Appeal (AT) (Insolvency) No.517 of 2018 9

"By Order dated 6.06.2018, this Court has simply dismissed the Special Leave Petitions of the petitioner which amounts to conforming the order of the High Court.

Mr. Vikramjit Banerjee, learned Additional Solicitor General appearing for the applicant/petitioner submits that it should be clarified that the petitioner has a right to file objections under Section 47 of the Civil Procedure Code and also points out that there are certain payments due to the petitioner as well which should be adjusted.

It is made clear that this Court had not expressed any opinion on such aspects. It will be open to the petitioner to move such application and the Executing Court can deal with the same in accordance with law.

With the aforesaid observations, the Misc. Applications stand disposed of.

Pending applications, if any, also stand disposed of."

Referring to the above Order, the argument is that since much

before the Notice under Section 8 was given in the present matter, there

were disputes regarding the amount of interest payable and its calculation

and when that dispute spiralled up to Hon'ble Supreme Court, the above

Order came to be passed. Referring to the above Order of the Hon'ble

Supreme Court, it is argued by the learned Counsel for the Respondent

that the dispute regarding adjustment calculation of dues has been left

open to the Respondent to raise the same before the Executing Court. The

Respondent claims that in the present matter, there has been lot of

litigation and after the above Order dated 30th July, 2018 of the Hon'ble

Company Appeal (AT) (Insolvency) No.517 of 2018 10

Supreme Court, the Hon'ble Supreme Court has directed that the

payments made shall be adjusted by the EP Court and as per provisions

of CPC, whether award is satisfied is to be decided by the Executing Court.

According to the Respondent, the Appellant has suppressed facts and the

reference to the above litigation clearly shows that there are serious

disputes between the parties with regard to the dues.

11. The learned Counsel for the Appellant referred to the provisions of

the Interest Act and subsequent Act of 2006 to claim that it is a simple

matter of calculations and the Award has to be looked into. The Interest

has to be calculated as per the provisions in these Acts.

12. We have heard both sides Counsel as above and have gone

through the matter and the copies of various judicial Orders filed relating

to the dispute between the parties. Copies of the Orders have been filed by

the Appellant and the Respondent. (Respondent filed the copies with

additional Affidavit filed with Diary No.9336).

13. As per Section 9 of the IBC, the only requirement for Adjudicating

Authority is to see in such application under Section 9, if there is record

of dispute. In the present matter, when the Notice under Section 8 was

sent by the Appellant, the Respondent sent Reply (Copy at Annexure -

A-6) referring to the litigation between the parties. Looking to the rival

claims of the parties as mentioned above, and copies of the various judicial

Orders which have been filed, we do not think that it is a simple matter

Company Appeal (AT) (Insolvency) No.517 of 2018 11

where there is an Award and Sections 34 and 37 proceedings under the

Arbitration Act have been disposed of. The litigation clearly shows serious

disputes pending between the parties with regard to the calculations of

dues. Admittedly, the amount of Award has been paid but the dispute

appears to be continuing with regard to the interest. In the facts of the

present matter, considering the developments of the litigation as pointed

out by the learned Counsel for the Respondent, we find that there is pre-

existing dispute with regard to calculation of dues and we do not find any

fault with the Orders passed by the Adjudicating Authority rejecting the

application.

In the result, there is no substance in this Appeal. The same is

dismissed. No Orders as to costs.

[Justice A.I.S. Cheema] Member (Judicial)

[Balvinder Singh] Member (Technical) /rs/nn

Company Appeal (AT) (Insolvency) No.517 of 2018